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The Pound to Dollar exchange rate could sail through the 1.30's in the coming months, bolstered by a more promising economic outlook and the prospects of political stability.
This is the prediction made by the CEO of one of the world’s largest independent financial advisory and asset management organisations.
DeVere Group's Nigel Green says major financial institutions are rushing into the UK’s currency, which is currently around $1.29.
"A growing number of investors are likely to pile in, further pushing the currency’s value in the near term," says Green. The call comes as data from the CFTC shows investor positioning in the Pound reached a record 'long' last week.
DeVere thinks Pound-Dollar can peak at 1.40 by March next year. This prediction is well ahead of the median forecast made by over 30 of the world's biggest financial institutions. In fact, it exceeds the highest forecast made by any investment bank. (To see these highly important investment bank forecasts for GBP/USD, please find out more here).
"The recent landslide win appears to have reignited confidence in the UK’s economic future, encouraging investors and driving positive sentiment across the markets," he says. "Labour’s decisive victory has created a stable political environment, essential for promoting economic growth and attracting investment."
DeVere expects the new government to implement policies that promote fiscal responsibility and economic development.
"This newfound political stability is a stark contrast to the turbulence seen in the United States, where the upcoming presidential election is creating uncertainty, and in France, which is grappling with ongoing political crises, affecting the euro," says Green.
However, one of the key factors supporting the Pound's bullish trajectory is the Bank of England’s monetary policy.
Unlike other central banks that are aggressively cutting interest rates, the Bank of England is expected to take a more measured approach.
"The anticipation that the Bank of England will cut interest rates less sharply than its counterparts has already had a positive impact on sterling, setting it on course for its best month since November," says Green.
Since the start of the year, the pound has appreciated nearly 1.5%, outperforming all group-of-10 peers against the dollar.
"We are optimistic that this trend will continue, and believe that should the momentum continue, the pound could reach a peak of $1.40 by March next year," says Green.